We recently published a list of 10 Best Hotel Stocks To Buy Now. In this article, we are going to take a look at where Host Hotels & Resorts, Inc. (NASDAQ:HST) stands against other best hotel stocks.

According to Cognitive Market Research, the size of the global hotel market was $784.82 billion in 2023 and is projected to grow to $1,126.04 billion by 2030. From 2023 to 2030, the hotel industry’s compound annual growth rate is anticipated to be 5.29%. Regionally, North America holds a substantial 30.66% market share, mostly because of the region’s abundance of hotels and resorts.

Recently, in Q2 2024, demand for hotels rose 1.3% year over year, above a 0.6% increase in supply and leading to a 0.7% increase in occupancy in the US. Secondly, a 2.2% year-over-year rise in Q2 2024 revenue per available room (RevPAR) was driven by higher occupancy combined with a 1.5% increase in average daily rate (ADR) YoY. The benefits were mostly due to two factors: the early Easter this year, which came in late Q1 2024 and contributed to higher business travel in the second quarter of this year compared to the previous year, and the complete solar eclipse, which encouraged more leisure travel throughout a significant portion of the US. Although the demand for hotels increased in the second quarter of 2024, short-term rentals and cruise lines maintained their market share gains. Additionally, the average hotel hourly wage was still more than $10 less than the average hourly wage in the country.

As per Frederic Dominioni, the Chief Revenue Officer of Solonis and a leading provider of modern property management solutions, there are five important trends driving the recovery in the hotel industry post-pandemic. Firstly, guests’ expectations are rising because of rising room rates, which increased by 54% from January 2022 to 2023. Secondly, the rise in “workcation” travels brought about by hybrid work has raised the need for flexible locations and services. Third, there is still a high desire for self-service choices and mobile technology, which helps to ease the staff shortage. Fourth, with 88% of travelers looking for local adventures, travel experiences have taken center stage. Lastly, given that 65% of travelers give priority to eco-friendly lodging, sustainability is essential. Hotels will prosper if they adjust to these developments through improving amenities and customizing visitor experiences.

Looking ahead, CBRE’s 2024 Global Hotels Outlook reveals that 2024 will be another year of progress for the US economy after 2023 saw RevPAR reach a record high. The continuous improvement in inbound foreign travel, the meetings and group events segment’s solid performance, and rising interest from leisure visitors are all expected to contribute to RevPAR growth, which is predicted to reach almost 3% year over year. Urban areas that are more appealing to leisure travelers and have more expensive hotels should do well, but competition from other sources, such as cruise lines, short-term rentals, and camping, is projected to restrict demand as well as pricing for traditional hotels. Hotel salary growth slowed to 4.6% in Q2 2024 from 5.5% in Q1, but it was still higher than the 4.0% hourly wage rise for all employees due to a decrease in job opportunities in the hotel industry. In Q2 2024, occupancy rates for all types of locations stayed below 2019 levels. Interstate and town sites were the most similar to their 2019 levels, at 99%, while urban and resort destinations were 94% and 96%, respectively.

On the other hand, Warren Marr, US Hospitality & Leisure Industry Advisor stated:

“Continued economic uncertainty, an upcoming election, and continued geopolitical tensions are expected to impact hotel performance in the US through 2025. Since our last issue of Hospitality Directions US in November, we’ve seen two additional quarters of decline in hotel occupancies, for a total of four, but expect to see a gradual rebound the balance of this year and into next, off of easier comps. That said, we expect average daily rate growth to trail PCE inflation through the rest of this year and 2025.”

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Host Hotels & Resorts, Inc. (NASDAQ:HST)

Number of Hedge Fund Holders: 26

Revenue Growth Rate (year-over-year): 8.29%

One of the biggest lodging real estate investment trusts in the US, Host Hotels & Resorts, Inc. (NASDAQ:HST), has reached a previously unheard-of mature growth stage in its development cycle. Among all REITs, hotels have one of the greatest betas, and they fluctuate in value in response to any signs that the US economy is expanding or contracting. Travel is one of the first expenses reduced when economic confidence declines, but people need to travel for business purposes while the economy is growing and prefer to travel when their jobs and income are stable.

Since hotel leases are for a single night only, daily occupancy and pricing resets promptly take the state of the economy into account. In previous recessions, revenue per available room fell for two to three years, and then there was a five- to six-year period of high single- to low double-digit revPAR increase. The economy usually experiences a new recession as growth slows, and the cycle repeats.

Almost 42,000 rooms across 77 mostly urban and resort upper-upscale and luxury hotel properties are owned by the company, most of which are located in the United States. Recently, the company’s shares in a joint venture with a portfolio of hotels across Europe and joint partnerships with properties in Asia and the US were sold off by the company. The Marriott and Starwood brands are used by the majority of Host’s portfolio businesses.

Despite the recent deterioration in the Hawaiian market, Chris Woronka, an analyst with Deutsche Bank, maintained a Buy rating on Host Hotels & Resorts, Inc. (NASDAQ:HST) with a price target of $22. He cited confidence in the company’s revised forecast and market adjustments. Woronka sees the company’s share repurchases and acquisitions as signs of increasing long-term value. The revised price objective preserves the stock’s positive outlook while reflecting forecasts that were recalculated in the wake of Q2 2024 earnings.

Noam Gottesman’s GLG Partners is the largest shareholder in the company, with 7,333,587 shares worth $131.86 million.

Overall, HST ranks 6th on our list of Best Hotel Stocks To Buy Now. While we acknowledge the potential of HST as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than HST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.